If you are thinking about ending your marriage, you may want to give some thought to pursuing spousal support. Doing so may allow you to maintain your current standard of living after your divorce concludes.
If you are eligible for spousal support, also called alimony, you may be able to choose either regular payments or a single lump-sum buyout. While there are a few advantages to lump-sum spousal support, there are also some drawbacks. Here are three of them.
1. You may receive less
In California, judges use a formula to decide how much spousal support to award. If this formula indicates you may receive more than your soon-to-be ex-spouse wants to pay, he or she may use a lump-sum figure to lure you away from monthly payments. With some quick math, though, you may realize the single payment is worth significantly less than ongoing ones.
2. Your spouse may not be able to pay
A divorcing spouse may use cash to cover lump-sum spousal support. If he or she does not have sufficient funds, giving up certain marital assets may be an option. Still, your spouse may simply not have the financial ability to make a single payment.
3. You may burn through the funds
Rebuilding your life after a divorce may take patience, diligence and resolve. If you are not great with money, though, a lump-sum alimony payment may be a mistake. After all, you may burn through funds quickly.
You know your financial habits better than anyone. If you are considering taking a lump-sum payment, you may want to work with a money manager to better protect your future financial interests.